Rule 14-910. Eligible claim.
(a) The loss must becaused by the dishonest conduct of the lawyer or the licensed paralegalpractitioner and shall have arisen out of the course of a lawyer/client,licensed paralegal practitioner/client, or fiduciary relationship between thelawyer or the licensed paralegal practitioner and the claimant and by reason ofthat relationship.
(b) The claim forreimbursement shall be filed within one year after the date of the final orderof discipline.
(b)(1) In cases of thelawyer?s or licensed paralegal practitioner?s death, the claim forreimbursement shall be filed within one year of the lawyer?s or licensedparalegal practitioner?s date of death.
(b)(2) In cases of thelawyer?s or licensed paralegal practitioner?s formal disability, the claim forreimbursement shall be filed within one year of the date of the order ofdisability.
(c) If the subject ofthe application for reimbursement from the Fund is or arises out of lossoccasioned by a loan or an investment transaction with a lawyer or licensedparalegal practitioner, each loss will not be considered reimbursable from theFund unless it arose out of and in the course of the attorney/clientrelationship or licensed paralegal practitioner/client relationship; and butfor the fact that the dishonest lawyer or licensed paralegal practitioner enjoyedan attorney/client or licensed paralegal practitioner/client relationship withthe claimant, such loss could not have occurred. In considering whether thatstandard has been met the following factors will be considered:
(c)(1) the disparity in bargaining power between the lawyer or thelicensed paralegal practitioner and the client in their respective educationalbackgrounds in business sophistication;
(c)(2) the extent to which the lawyer's or the licensed paralegalpractitioner?s status overcame the normal prudence of the claimant;
(c)(3) the extent to which the lawyer or licensed paralegalpractitioner, by virtue of the attorney/client or licensed paralegal practitioner/clientrelationship with the claimant, became privy to information as to the client'sfinancial affairs. It is significant if the lawyer or licensed paralegalpractitioner knew of the fact that the client had available assets or wasexpecting to receive assets which were ultimately wrongfully converted by thelawyer or licensed paralegal practitioner;
(c)(4) whether a clear majority of the service arose out of arelationship requiring a license to practice law in Utah, as opposed to onethat did not. In making this evaluation, consideration will be given to:
(c)(4)(A) whether the transaction originated with the lawyer orlicensed paralegal practitioner;
(c)(4)(B) the reputation of the lawyer or licensed paralegalpractitioner as to scope and nature of his/her practice and/or businessinvolvement;
(c)(4)(C) the amount ofthe charge made for legal services, if any, compared to that for a finder'sfee, if any; and
(c)(4)(D) the number ofprior transactions of either a similar or different nature in which the clientparticipated, either with the lawyer or licensed paralegal practitioner involvedor any other lawyer, licensed paralegal practitioner, person or businessorganization;
(c)(5) the extent to which the lawyer or licensed paralegalpractitioner failed to make full disclosure to the client in compliance withthe Utah Rules of Professional Conduct, including disclosure of the lawyer's orlicensed paralegal practitioner?s financial condition and his/her intended useof the funds.
(d) Exceptions. Exceptas provided by paragraph (e), the following losses shall not be reimbursed:
(d)(1) loss incurred by spouses, children, parents, grandparents,siblings, partners and associates of the lawyer or licensed paralegalpractitioner;
(d)(2) losses covered byany bond, surety, agreement or insurance contract to the extent coveredthereby, including any loss to which any bonding agent, surety or insurer issubrogated to the extent of that subrogated interest;
(d)(3) losses of any financial institution which are recoverableunder a "Banker's Blanket Bond" or similar commonly availableinsurance or surety contract;
(d)(4) any business entity controlled by the lawyer, licensedparalegal practitioner or any person or entity described in paragraph (d)(1);
(d)(5) any governmental entity or agency;
(d)(6) any assigned claims, third party claims, claims of heirs orestates of deceased claimants;
(d)(7) any claims where claimant has failed to exhaust all otherreasonably available services or recovery methods;
(d)(8) any investment losses, as distinguished from legal fees,which might reasonably be characterized as:
(d)(8)(A) any pyramid or ponzie scheme;
(d)(8)(B) any investment in or loan to any offshore entity;
(d)(8)(C) any investmentin or loan to an entity that claims that a benefit to the investor would be theevasion, avoidance, reduction or other sheltering of taxes that would beotherwise assessed on the investment; or
(d)(8)(D) any investment that promises such a high rate of return thata reasonable and prudent person would suspect that the venture is of unusuallyhigh risk.
(e) In cases of extremehardship or special and unusual circumstances, the Committee may, in itsdiscretion, recognize a claim which would otherwise be excluded under theserules.
Effective May 1, 2019